I'll come clean -- today's issue is… well… dense.

We're covering a deep topic… Something that usually makes a normie’s head spin.

And that's a shame.

Because this ONE SINGLE FACTOR is going to control the stock market for the next six months.

But I have faith in you, dear Rude reader… so let me help you understand the secret lever the government is now using to pull the strings of the U.S. economy.

You may not be aware of this, but when you take out a mortgage or a car loan, the base rate of that loan is the 10-year yield. Naturally, you're a bigger risk than Uncle Sam, so the lender adds a few points to your loan. That's how the system works. Government sets the rate, banks mark up the rate, and you get a loan. In short, the 10-year yield underlies America’s entire credit system.

The higher the 10-year yield, the harder it is to repay loans. The lower it is, the easier it is to pay back loans. This goes for businesses as well as people. New U.S. Treasury Secretary Bessent wants to make it easier for everyone to repay loans to stimulate Main Street’s economy.

The 10-year yield is thesecret lever that controls the real U.S. economy. The USG’s new strategy of targeting this lever instead of the stock market is the most important change in investing in the last 38 years. Here’s what you need to know.

The End of an Era… And a Way of Thinking

Going back to Alan Greenspan’s tenure as the Chairman of the Federal Reserve from 1987 to 2006, the USG has left it to the Fed to monitor the economy and raise and lower interest rates as it sees fit. However, the Fed only “controls” overnight interest rates, which has the effect of goosing or cooling the stock market. According to the most recent data, only 56-62% of Americans own stock. Essentially, the Fed only worked for just over half of America.

In addition, the USG is borrowing far too much money, incurring a debt of over $36 trillion (and that’s just the official number), and fiscal dominance has set in.

Fiscal Dominance

Fiscal dominance is when the USG’s spending and borrowing needs take control over economic policy, forcing the Fed to adjust interest rates or money supply to support the government’s budget.

This is part of why you often see Secretary Bessent in the news. Fed Chairman Jay Powell might as well be on the back of a milk carton (yesterday’s non-issue of a press conference notwithstanding). The Fed doesn’t matter as much as it used to, which is shocking considering how we hung on the Chairman’s every word for the past 38 years.

A Real Policy for Real People

All this has turned Secretary Bessent’s attention to the real economy. The U.S. can no longer continue as a country that only supports its “asset-rich” people. That means the government won’t conduct economic policy to see how the stock market likes it.

The Treasury, not the Fed, will conduct economic policy to stimulate the real economy. Or, if you prefer, Main Street over Wall Street.

Let’s get a bit more in the weeds about the 10-year yield.

Lower Yields Means Higher Better Spending

The 10-year yield is the benchmark for the credit market, including mortgage rates, auto loans, and corporate borrowing costs. By targeting a lower yield, Bessent wants to make financing cheaper for families.

The stock market doesn’t always reflect the broader economy’s health. Targeting the 10-year yield shows a preference for fixing the "real economy"—where people live, work, and borrow—over boosting asset prices that only benefit wealthier individuals with stock holdings.

It’s not all for the people, though. The U.S. government’s borrowing costs are the Treasury yields. So, lowering the 10-year yield will reduce the interest burden on the national debt, freeing up the budget for other things like infrastructure building or tax cuts.

Bessent wants to lower yields without relying on Fed cuts, which would stoke inflation. By focusing on the 10-year yield, he will directly control long-term rates, offering a more precise tool than broad monetary policy shifts that might juice the stock market and increase consumer prices.

How Does This Affect Normal Americans?

All sorts of good things can come out of this… if appropriately executed. Remember, ideas aren’t worth much; the execution matters. So, let’s control our excitement for now.

With that said, a lower 10-year yield usually lowers mortgage rates. This will mean lower mortgage payments for the average American looking to buy a home. Though, to be fair, a lower 10-yield will put upward pressure on house prices, so Bessent needs to walk a delicate line here.

Similarly, lower car or small business loan rates should ease financial pressures and spur spending or investment.

If you got used to crazy equity gains, this might not light you up. Targeting the 10-year yield won’t directly lift retirement accounts like 401(k)s or IRAs. While this will initially disappoint some investors, it shifts the focus toward benefits that lift the wider population.

Cheaper business borrowing should lead to expansion, hiring, and investment in new projects. However, if lower yields signal weaker economic growth expectations (as bond yields often fall when investors seek safety), wage gains or job creation might slow in the short term.

By keeping long-term rates low without aggressive Fed intervention, Bessent will avoid runaway inflation that destroys purchasing power. For everyday Americans, this will mean more stable prices for goods and services, though success depends on how global factors (like tariffs or supply chains) play out.

Lower borrowing costs for the government will free up funds for roads or schools.

Wrap Up

Secretary Bessent’s plan is novel, bold, and sound. It’ll take the fun out of the stock market for a while, but it should yield considerable benefits in the long run.

This policy will also allow President Trump to kick Wall Street in the goolies for not supporting him for the last 8 years. There is no punch bowl to get drunk on or crazy rallies to get rich too quickly.

I look forward to Main Street healing and Wall Street whining.